The Big Short: A Scary Realization

When I was first hired on as an analyst at a top 20 bank I was buried in nondisclosure agreements, inter-company ethic codes and complicated rules regarding my personal investments. In addition I was drowning in banking terms like leveraged leases, basis points, normalized yields, and derivative swaps.

I felt overwhelmed and exhausted with all this new information and all of these rules and regulations. I couldn’t help but wonder how a seemingly simple idea like banking (a business that holds people’s money and uses it to create loans for other people) could be so…complicated.

As any good employee does, I decided to do some research on my own time. Where did I turn for knowledge on the in’s and out’s of the banking industry? Why Hollywood of course!

Enter The Big Short book, written by bestselling author Michael Lewis. Yes the same guy that told us about the time Sandra Bullock adopted a professional football player and also shined light on Brad Pitt’s ability to run a discount baseball team. This time Lewis takes on the world of Wall Street, a path he has been down before in both his personal career as a bond salesman in the ’80s as well as his writing career in Liar’s Poker.

The Big Short tells the story of four groups of men who predicted (and profited off of) the collapse of the United States economy in 2008. At the same time the story attempts to educate readers about the corruption of Wall Street and the major banks in America.

As far as comparing the two entities, the movie did a great job translating a difficult narrative into a smooth and enjoyable experience. Other than changing a few minor details (names and places) the book and film coexist in my head as the same thing. Which is a deeply educational and enjoyable story about the complexities and dangers of our economy both past and future.

I decided to dive into the book before watching the movie and it was a wise decision. During the book I kept a notebook of notes and questions so I could fully understand what was going on. The notebook did not last long, I simply grew tired of having to write down everything I didn’t understand because, well, I didn’t understand any of it.

The movie doesn’t shy away from these complex banking terms. In fact it faces the issues of its own complexity head on by pulling a Deadpool and breaking the fourth wall. The film uses famous people in various settings (bathtubs, playing blackjack) to explain a few of the more complicated idea that the film presents. An idea that works for entertainment purposes but struggles to help convene understanding of the complex topic at hand. Mostly because the topics are just too difficult to summarize in a brief 15 second scene.

With my reading of the book and the help of these celebrities, I still found myself pausing the movie every 20 minutes or so to help explain to my wife what exactly was going on. And towards the end of the movie, much like the book, I found myself shrugging whenever she had a question. For both mediums the beginning and middle help carry the reader through with various explanations and pauses and summaries. But at some point, right when all the action is finally happening, the floor is dropped beneath the reader and the viewer and the hand holding ends.

And perhaps that is the entire point of both versions. From the beginning it is clear that Wall Street and the banks are aware that most Americans don’t understand the complexities of our economic system and that they use that to their advantage. What this story does is brings people up to speed relatively quickly about the underlying causes of the financial crisis. Once the reader/viewer is feeling confident in their new found knowledge they are suddenly overwhelmed with even more questions. And these questions lead to a realization that no one really understands what they are doing and what their impact on the economy could be. By the end of the film, and book, it’s clear that it’s not just the average person that doesn’t understand the complexities of our economy but it’s also the people in charge.

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